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By XE Market Analysis December 18, 2013 3:42 pm
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    XE Market Analysis: Asia - Dec 18, 2013

    The greenback was mixed in very light pre-FOMC trade, losing some ground to the euro and pound, while posting modest gains against the yen and CAD. Stronger November housing starts raised some eyebrows, and added another positive data point into the Fed announcement. Trade remained quiet in early afternoon, though come FOMC time, the dollar fell for an instant after the announcement, though quickly rebounded on the back of the $10 bln taper. Wall Street took a dive initially, though it too turned quickly higher. The Fed's dovish stance on rates may have helped equities, though while Treasury yields jumped at first, they settled back near pre-FOMC levels. USD-JPY snapped down to 102.70 from 103.02, before launching to 103.66. EUR-USD meanwhile, popped to 1.3807 from 1.3760, then stumbled to 1.3701. Looking ahead, the USD may have some room to rise some, thought with U.S. rates to stay low as far as the eye can see, there may not be much upside room left.

    [EUR, USD]
    EUR-USD edged up to within a pip of the London highs in N.Y. morning trade, touching 1.3777 before inching back to 1.3760 into the FOMC. The pairing initially rallied to 1.3807 after the announcement, though was quickly slammed to 1.3701. As the Fed indicated rates would stay exceptionally low for a long, long time however, the euro perked back up over 1.3800, as Treasury yields dipped under pre-FOMC levels. The dreaded taper was not much of a shock, especially given the emphasis given low rates going forward.

    [USD, JPY]
    USD-JPY found support into 103.00 early in the session, finding Japanese bids appearing near mid-morning. The pairing vaulted to session highs of 103.28 ahead of the London close, and was steady over 103.00 ahead of the FOMC. Volatility rocked the pairing after the announcement, where it first dove to near 102.75, before vaulting up to 103.66 highs.

    [GBP, USD]
    Sterling surged on the unexpected unemployment drop in London morning trade, which fell to 7.4% in October to complete a two-month 0.3 of a percentage point drop with the 99k dive in unemployment. Cable marched up to 1.6370 into the N.Y. open from lows of 1.6275. The pairing touched 1.6400 into the FOMC, and ramped up to 1.6485 highs in the aftermath, just shy of out 1.6500 target. We may see some profit taking going forward.

    [USD, CHF]
    EUR-CHF found support into 1.2200 through the morning session, after recovering from Tuesday's sharp sell-off. Fears of SNB intervention, verbal or otherwise, saw the CHF dip considerably through the London morning. The Fed's taper had surprisingly little impact on the CHF, with the cross stuck between 1.2220-30 and USD-CHF moving briefly over 0.8900.

    [USD, CAD]
    USD-CAD maintained altitude through the morning session and into the Fed, currently trading over 1.0640, after peaking at 1.0647. The mix of U.S. and Canadian data had little impact, and dealings were quite light overall. Upside resistance is seen at 1.0670, representing the highs of both December 9th and 13th, which capped the pairing ahead of the Fed. USD-CAD popped to 1.0691 after the Fed, though as with the USD in general, slipped back to overnight low under 1.0610. Offers are in place higher up at 1.0700, with corporate bids now seen parked at 1.0600.

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